With seven weeks until the General Election, George Osborne began his 2015 Budget speech in campaigning style – emphasising positive growth forecasts, falling unemployment and inflation rates, and a reducing national debt as a share of GDP. Nevertheless, he remained resolved against offering dramatic giveaways to taxpayers. Instead he confirmed or announced a range of tweaks with something positive for most sections of society: pensioners and first-time buyers, savers and scientists, businesses and farmers, the North and South West – all had at least something to savour. This was “a Budget for Britain – the comeback country”.
On the personal tax front, a four-pronged package was introduced as a “saving revolution”. Firstly, pensioners will be given access to their annuities without having to incur a punitive tax charge. Secondly, a radically more flexible ISA will enable savers to invest and withdraw ISA funds without losing any of their tax-free entitlement. Third, a new help-to-buy ISA will be created, with the government contributing £50 for every £200 paid in, up to a maximum top-up of £3,000. And finally George Osborne announced a new personal savings allowance, so that the first £1,000 of interest on all savings will be free of tax.
Additional measures around personal tax included the planned abolition of annual paper tax returns and, less welcome, a further reduction in the pension pot lifetime allowance from £1.25m to £1m from next year. Those with an interest in inheritance tax planning will be concerned by the coming review of IHT avoidance through the use of deeds of variation.
Turning to business, the Chancellor stressed the benefits of the UK’s competitive tax regime and low rates of corporation tax. However, he restated his commitment to tackling tax evasion and avoidance, persisting with the diverted profits tax which is due to go live in April 2015. He also had banks in his sights, announcing a rise in the annual bank levy to 0.21%. There was better news for North Sea oil producers, who will benefit from a reduction in the supplementary charge from 30% to 20%, and a cut in petroleum revenue tax from 50% to 30%.
For smaller businesses the outcome of this Budget was initially less clear – changes are also to be made to the Enterprise Investment Scheme and Venture Capital Trust rules so that they remain focused on smaller and growing businesses. The government also plans to tighten up entrepreneurs’ relief so this applies only to genuine business disposals. As ever, the detail of all these announcements will need careful review.